By Lina Irawan 
On a pivotal Friday, the Supreme Court affirmed lower court rulings by striking down tariffs imposed under the International Emergency Economic Powers Act (IEEPA). This act, traditionally reserved for national security crises and sanctioning hostile regimes, was controversially invoked by the Trump administration to levy broad duties on imports, a move critics consistently argued stretched the statute beyond its intended scope. The unanimous decision from the High Court validated years of legal challenges brought by thousands of American companies, marking a significant check on presidential authority in trade policy.
However, the administration’s response to this definitive legal defeat was immediate and defiant. Hours after the Supreme Court’s announcement, President Trump declared a fresh set of global levies, strategically pivoting to different legal authorities, including Section 232 of the Trade Expansion Act of 1962, which permits tariffs based on national security concerns, and Section 301 of the Trade Act of 1974, targeting unfair trade practices. Simultaneously, his administration initiated new investigations under these revised legal frameworks, signaling a clear intent to maintain, and potentially expand, its protectionist trade agenda for the long term. This swift legislative maneuver underscores the administration’s unwavering commitment to its tariff policy, even as the legal foundation for its prior actions crumbled.
The true flashpoint of the impending conflict, however, lies in the collected revenue. Despite the Supreme Court’s clear declaration of illegality, the ruling notably did not prescribe a detailed mechanism for refunding the substantial tariff revenue already amassed. Instead, it punted the complex task of "figuring out" the refund process to the U.S. Court of International Trade (CIT). This judicial vacuum has been quickly filled by the administration’s resolve to retain the funds, sparking outrage among businesses and legal experts who view this stance as a blatant disregard for judicial authority and a betrayal of prior government assurances.
Sources privy to internal discussions told Politico that administration officials are actively exploring a range of strategies to avoid, or at least minimize, the payout of these massive refunds. Among the ideas reportedly being weighed are discouraging companies from even demanding refunds, subtly implying that the arduous process might not be worth the effort. Another controversial tactic involves arguing that revenue collected previously under the now-illegal IEEPA tariffs could be retroactively legalized under the new tariff authorities announced by President Trump. This approach, if pursued, would likely face immediate and intense legal challenges, as it essentially seeks to validate past unlawful actions through present legislative reclassification. A third, more coercive, proposal suggests offering claimants a fast-track to their refunds if they agree to surrender a portion of the funds they are rightfully owed, effectively imposing a "transaction fee" on legally mandated restitution. The White House, when approached by Fortune for comment on these reported strategies, did not immediately respond, further fueling speculation about its intentions.
The administration’s stance on refunds has been unequivocally articulated by Treasury Secretary Scott Bessent. In a revealing interview with Fox News shortly after the Supreme Court’s ruling, Bessent controversially labeled the prospect of refunds as "the ultimate corporate welfare." This characterization has been widely criticized for misrepresenting the nature of the funds, which were illegally collected from American businesses and consumers, not foreign entities. Speaking at the Economic Club of Dallas in the immediate aftermath of the decision, Bessent also indicated a willingness to drag out the process, stating the issue "could be dragged out for weeks, months, years." On the specific IEEPA revenues, he initially declared, "I got a feeling the American people won’t see it," a comment that sent shockwaves through the business community. While he later tempered his remarks, adding that he would "follow the court’s direction on refunds," the initial defiance highlighted the administration’s strong predisposition against repayment. President Trump himself echoed this sentiment, predicting that refunds would "get litigated for the next two years," signaling a protracted legal battle rather than a swift resolution.
This resistance stands in stark contrast to previous assurances made by the Justice Department. During the litigation of these very tariffs last spring, Justice Department lawyers repeatedly informed courts that if the tariffs were ultimately deemed unlawful, the government would indeed issue refunds to the plaintiffs. These assurances were crucial in persuading courts not to grant plaintiffs emergency relief from the tariffs, allowing the duties to remain in place during the legal proceedings. The government’s argument then was that any harm incurred by businesses would be temporary and fully reparable through subsequent refunds.
Neal Katyal, a partner at Milbank LLP and former acting U.S. solicitor general in the Obama administration, who argued the case before the Supreme Court on behalf of the plaintiffs, sharply criticized the administration’s current hesitance. In a Washington Post op-ed, Katyal pointed out the hypocrisy, stating, "The government cannot tell courts that refunds are simple and inevitable when seeking relief—and then imply they are complex and distant when the time comes to pay. The rule of law does not operate on shifting premises." His powerful argument underscores the ethical and legal bind the administration faces, having previously leveraged the promise of refunds to maintain its tariff regime.
Adding another layer of urgency to the refund debate is the identity of those who ultimately bore the cost. Katyal emphatically highlighted that most of the tariff revenue is owed not to foreign entities, but to Americans. This assertion is strongly supported by independent economic analysis. A New York Fed study, cited extensively in the original reporting, conclusively found that U.S. consumers and companies have paid a staggering 90% of Trump’s import taxes, directly contradicting the administration’s long-standing claims that other countries were shouldering the burden. This means the $170 billion in question represents a massive drain on American businesses’ capital and a hidden tax on domestic consumers. Importers, from large corporations to small businesses, absorbed these costs, often passing them on to consumers through higher prices or reducing their own profit margins and investment capabilities.
Anticipating the Supreme Court’s decision and the administration’s potential reluctance, many companies had already initiated legal action to safeguard their right to refunds. Giants like Costco, which paid substantial levies, filed lawsuits to ensure they would recover their money. Following the Supreme Court’s ruling, FedEx became one of the first major companies to sue for a full tariff refund, filing a complaint on Monday in the U.S. Court of International Trade. This signals the beginning of what is expected to be a deluge of similar lawsuits from thousands of other affected companies, each seeking to reclaim their illegally collected funds.
Historically, the U.S. government has paid refunds after similar court cases. The Customs and Border Protection (CBP) agency even has an established process for refunding duties when importers can prove an error. This precedent suggests that the infrastructure and legal framework for such repayments exist. However, the sheer scale of the current claims and the administration’s stated opposition present an unprecedented challenge.
Trade lawyer Joyce Adetutu, a partner at the Vinson & Elkins law firm, told the Associated Press that "the government is well-positioned to make this as difficult as possible" for importers seeking refunds. She speculated that the administration might "push as much responsibility as possible onto the importer," potentially forcing them to navigate a labyrinthine bureaucratic process or even compel them to go to court to reclaim their money. This could involve demanding exhaustive documentation, challenging the validity of claims, or imposing strict deadlines and complex procedures that overwhelm businesses, especially smaller ones with limited legal resources. The goal, from the administration’s perspective, might be to deter claims, reduce the total payout, and prolong the process indefinitely.
The implications of this unfolding saga extend far beyond the immediate financial dispute. For American businesses, the uncertainty surrounding these refunds creates a climate of distrust and makes long-term financial planning exceedingly difficult. For the judiciary, the administration’s resistance to enforcing a Supreme Court ruling poses a significant challenge to the separation of powers and the integrity of the legal system. If the government can simply refuse to honor judicial directives, it could set a dangerous precedent for future executive actions.
Furthermore, the economic impact of potentially withholding $170 billion is substantial. This sum, if returned to businesses, could stimulate investment, reduce consumer prices, and provide much-needed liquidity in various sectors. Conversely, its retention by the government, after being deemed illegally collected, represents a significant transfer of wealth from the private sector, potentially hindering economic recovery and growth.
In essence, the Supreme Court’s ruling, while a victory for the rule of law, has merely opened a new, intensely contested chapter in the Trump administration’s trade policy. The battle over $170 billion in illegally collected tariffs is not just a legal squabble; it’s a profound test of accountability, executive power, and the government’s commitment to its own legal assurances. As President Trump himself predicted, this complex and high-stakes issue is likely to be litigated for years to come, leaving businesses and consumers in a prolonged state of uncertainty while the wheels of justice grind slowly forward.